An Albemarle judge has handed a big win to developers in the battle over Biscuit Run, ruling last week that the state under-appraised the 1,200-acre parcel south of Charlottesville by $45 million in a deal that traded tax credits for development rights.
“This is a huge victory,” said Craig Bell, attorney for Forest Lodge, LLC, the group of wealthy local property owners whose members bought the plot for a record $46.2 million in 2009, then sold it to the state in a crashing market so they could take advantage of a conservation program allowing them to claim 40 percent of the land value in tax credits.
That value was the focus of the year-and-a-half-long legal fight. Appraisers for the tax department had put it at $30-39 million, while Forest Lodge said it was between $86-88 million, according to Brian J. Gottstein, spokesman for the attorney general’s office.
The fact that Peatross determined the property was worth about $87 million means Forest Lodge will get about $20 million more in tax credits thanks to the state easement program, and avoid eating an eight-figure loss on the failed development project.
Gottstein wouldn’t say whether the state planned to appeal, because the suit isn’t over—there’s still a separate counterclaim from the state over taxes and charitable status to resolve.
But the decision looks like vindication for Forest Lodge, and a setback for a tax department now under fire for what the court called a clear conflict of interest: relying on an appraisal by a contractor named Lawrence Salzman, who was also representing the department as an attorney at the time.
“How can you be a lawyer for the tax department, then certify that you have no interest in the department’s position?” Bell asked. “How many of these matters were settled that weren’t out there in the public at an open trial? That’s the part that’s troubling to folks that follow this stuff.”
And plenty have been following the Biscuit Run suit. It was one of the biggest land value disputes in the history of the state’s 14-year-old easements-for-tax-credits program, by turns lauded as a key tool to preserve rural areas and vilified as a tax loophole for the rich. It’s also the only suit Bell knows of that’s been resolved by a judge and not a settlement.
The fierce pushback from the state on the appraisal has made people wary of the program, said Duane Zobrist, a Charlottesville attorney and former Planning Commissioner who worked as Forest Lodge’s attorney during the deal with the state.
“I haven’t done any easements since,” he said.
Bell also said he thought the effectiveness of the program had been dampened by an aggressive tax department. But he stopped short of saying the Commonwealth was systematically trying to stiff landowners. “I don’t think they’re purposely low-balling,” he said. “Perhaps they need to consider a wider variety of appraisers, maybe some who aren’t advocates. And perhaps that hasn’t occurred in some of the larger cases.”